Premier Oil keen on North Sea acquisitions
Chief expects uptick in deal activity in the sector after prolonged downturn
Premier Oil is looking at possible acquisitions in the North Sea as some of the world’s largest energy groups prepare to scale back their presence in the region.
Tony Durrant, chief executive of Premier, said he expected an uptick in deal activity as the industry emerges from a prolonged downturn. Premier, he said, was “on the buyside” and would look for opportunities to expand its presence in the North Sea.
Chevron, the US oil group, in July announced it was selling a large package of assets. France’s Total is also understood to be preparing to sell some fields. While some of the world’s majors have reduced their presence, the region has seen an influx of private equity owners in recent years.
Mr Durrant was speaking after the company announced that profits in the first six months of the year had more than doubled to $98.4m, helped by the higher oil price. Earnings before interest, tax, depreciation and amortisation were 19 per cent higher at $388.9m for the period to the end of June 2018.
Shares in Premier were up 1.15 per cent in late afternoon trading to 122.9p.
The independent UK company has been focusing on reducing net debt since the collapse in oil prices; it reported that this fell from $2.72bn to $2.65bn. Mr Durrant said he believed the company’s banks would “support some increase in leverage” if it found a suitable acquisition.
Premier said group production for the first half was slightly down on the same period last year — it averaged 76,200 barrels of oil equivalent per day — as new production from its flagship North Sea field Catcher and outperformance from a field in Vietnam was offset by asset sales and planned maintenance. The company said it was sticking to its full-year production guidance of between 80,000 and 85,000 boe/d for the full year.
Analysts at RBC Capital Markets said the results “underline Premier is on the cusp of material deleveraging”.
The company earlier this week sanctioned the Tolmount Main gasfield, one of the largest undeveloped gas discoveries in the southern North Sea. On Thursday, it said “significant upside” exists within the Greater Tolmount Area and that it planned to drill an appraisal well in the eastern area in the middle of next year.
Mr Durrant said Premier was still in the process of selecting contractors to help it develop a large oilfield in waters north of the Falkland Islands.
The Sea Lion project, which was discovered by Rockhopper, an Aim-quoted company, could be a material opportunity for Premier with about 400m boe (net to Premier) to be developed over several phases. Premier has awarded letters of intent to several contractors. It will now focus on securing senior debt funding for the project in the second half of this year, ahead of taking a final investment decision.